When Will Climate Policy Hit the Wall?

Contributed by Robert Lyman © 2022. Robert Lyman’s bio can be read here.

People who participate in endurance sports like road racing and long-distance running sometime experience the feeling of “hitting the wall”. By this, they mean that have a sudden fatigue or loss of energy that prevents them from being able to continue at the same rate. Others, in a business environment, may use the metaphor to refer to what happens when one reaches the limits of one’s resources and support, and must discontinue a project or undertaking.

Governments too can hit the wall when some event occurs that so undermines the premises upon which policy is based that the public forces decision makers to change. When might Canadian climate policy “hit the wall”?

The answer to this question lies partly in the realm of factual analysis (about scientific, economic, and policy developments) and partly in the realm of political judgment. In other words, actual conditions may change but it may have little or no effect on the decisions of elected officials unless the public learns about the change and it is of such importance that it alters the public support for current policy approaches. As the public only learns about changes in conditions through the media, the media have a large role to play in determining when and how public attitudes might change and therefore affect political decision makers. Defining the nature and timing of hitting the wall is thus largely a matter of speculation. Most of this article, therefore, will focus on the effects of decarbonization – the effort to reach “Net Zero” emissions by moving off fossil fuels, allegedly to stop human-caused global warming. As I will explain, these efforts will turn the lives of ordinary people upside down, and under certain circumstances, might force policy changes. I will not attempt to forecast when that will happen.

The net zero target is itself the product of misreading of the analysis by the Intergovernmental Panel on Climate Change and of the more authoritative work of Nobel Prize-winning economist William Nordhaus which allegedly justified the United Nations target of limiting the rise in global temperatures by 2100 to less than 1.5 degrees Celsius. In fact, the economics literature does not support that target.[1]

In other words, the claim that the world can and will reduce carbon dioxide emissions to completely decarbonize by 2050 is the product of politics and theatre, not serious analysis and understanding of the global energy system.
The question, therefore, is how far in the movement towards this untenable future would the world, and Canada, travel before its unacceptability overwhelms the public’s consciousness and pocketbooks?

What Complete Decarbonization Means

First things first. Let us establish what full decarbonization – the complete elimination of the use of oil, natural gas and coal in the Canadian economy – would mean for life in Canada and other countries.

History offers some insights. The world before 1800 was mainly decarbonized. The invention of the steam engine allowed coal to be used to power industrial plants, trains and ships. The discovery of large oilfields and of ways to produce from them in the late 19th century, followed by the invention of the internal combustion engine to power cars and trucks in the early part of the 20th century, revolutionized the way people and goods moved. The invention around the same time of electricity and of ways to transport and apply electricity for lighting and heating allowed the application of energy to hundreds of new uses, a process that goes on today. Energy made work easier and allowed a massive increase in economic activity (investment, employment and trade) that improved living standards and expanded people’s choices of what to do and how to spend their time.

Today, about 84% of the energy used in the world comes from fossil fuels.[2] The rest comes from a variety of sources, the most important of which are nuclear energy, hydro-electricity and traditional biomass (wood and dried animal dung). New renewables, like wind and solar energy, account for about two per cent. The proportions are different in countries like Canada, where fossil fuels account for only about 77%,[3] but still by far the majority.

Oil and natural gas are also extremely important sources of feedstock (i.e. building materials) for petroleum and petrochemical products. Without them, we would not have access to hundreds of products that most people consider either essential or highly valuable for modern life. The examples are almost endless, but allow me to cite a few that young people might miss if they were gone – televisions, cell phones, computers, most clothes and footwear, refrigerators, air conditioners, hand lotion and cosmetics, antiseptics, deodorant, purses, panty hose, eyeglasses, luggage, and credit cards. There would be no plastic products to supply a huge range of things varying from water pipes to ice cube trays. Life as we know it would have much less variety.

What would ending oil consumption mean? Well, the largest energy consuming sector is transportation, where oil-fueled vehicles and other modes of transport constitute about 96% of consumption. People like to hope that electric cars will catch on, but up to now, they constitute only 3% of new car sales, even with government subsidies of up to $15,000 per vehicle. Would we really be able to eliminate all internal combustion light duty vehicles regardless of cost? Would people be glad to go everywhere by foot, bicycle, or (if you were lucky) by bus at all times and in all weather conditions? The fastest growing source of transportation emissions is commercial trucks. Electric-powered trucks are barely on the horizon. How would we move products around the country if we eliminated the trucks? The most emissions-intensive mode of transportation is aviation. How would Canadian react if they could no longer fly, but had to take trains or buses to move across the country (noting that both trains and buses run on oil products, too)?

Consider other consequences of decarbonization.

All current production of fossil fuels would have to be phased out. The fuel-producing jurisdictions, faced with economic disaster, might “push back” a bit. Further, as the imposition of regulatory restraints on fossil fuel consumption would undoubtedly cause the price of existing production to decline sharply, governments would have to centrally plan (i.e. totally control) virtually all parts of the energy economies in all the countries of the world.

It would be necessary to replace most of the world’s existing industrial and transportation infrastructure that now depends on fossil fuels; the costs of this would be in the many trillions of dollars.

It would require the electrification of all parts of the global economy. Currently, electricity supplies only about 20 % of the world’s energy needs.[4] The needed additions to transmission and distribution infrastructure to take those totals to 100% would be many times what has been accomplished over the past century – all done in 28 years.

The technological constraints are enormous. To take one example, electricity supply must be reliable, and wind and solar energy are intermittent (i.e. they produce only when the wind blows or the sun shines, not when electricity is needed). Bulk electricity storage is extraordinarily expensive and extremely limited in capacity. “Big Batteries” typically only offer minutes of power generation back-up when in reality, a reliable power grid would need days or weeks of back-up power. Recent estimates for utility scale storage show combined renewables/storage costs to completely electrify Canada of over $83 trillion.[5]

Globally, farmers would not be able to obtain the supplies, fertilizers or pesticides they need to plant their crops and it is questionable whether they would have modern farm machinery. Food production would drop sharply in all parts of the world, as agricultural practices went back to what they were at the end of the 19th century. Billions of people would starve.

Without natural gas and coal, there would be a shortage of electricity generation capacity and fuel for residential and commercial heating. Almost all parts of the world would experience blackouts and brownouts. This would make modern manufacturing possible in only some countries, like China, and that would have enormous strategic and security implications. Air-conditioning would become a luxury enjoyed by only those with higher incomes.

Because of the shortages of so many things, prices would rise significantly, even as incomes fell. People would not be able to get most of the goods and services on which they now depend. Older people would be most vulnerable. Hospitals would not be able to get many of the medications that they need or be able conduct operations with the anesthetics now available. Many people would die as a result.

Public Awareness

Public opinion polls and the occasional public consultations offer sometimes puzzling indications of what people in OECD countries think about current climate policies. In Europe and North America, the public is, by now, so “indoctrinated” by the educational system, the mainstream media and the statements of political leaders, that it accepts with little question the theses that climate change is occurring, that it is caused by human greenhouse gas emissions, and that the consequences may be very bad unless emissions are sharply reduced. It is less clear whether the average person ever considers the question as to how Canada, with its 1.6% of global GHG emissions, can make any difference or whether international agreements will succeed in reducing emissions (which they have spectacularly failed to do up to now). Ironically, polls asking how much people would be prepared to pay to “solve” the climate problem typically indicate they would pay about $10 per month, far less than current policy costs in Canada.

In these circumstances, It is possible that a series of revelations that run contrary to the “science” storyline might have an impact on the public’s support for emissions reduction measures, but this seems doubtful. By now, hundreds of peer-reviewed studies have been published showing that the actual increases in global temperatures are less than half those projected by the Intergovernmental Panel on Climate Change (IPCC), [6] that so-called extreme weather events are mostly unchanged from long-term historic patterns,[7] that the media exaggerates the results of IPCC scientific reports to create a crisis atmosphere,[8] and that the majority of scientists do not believe that a climate “catastrophe” is in prospect.[9] Such findings, however well documented, seem to have little effect on the public consciousness.

It is thus unlikely that a single event or group of related events will provoke a major change in public perceptions. It appears more likely, in my view, that public attitudes may change as a consequence of costly climate policy measures that have large impacts on consumers and workers in the most populous parts of Canada i.e. Ontario and Quebec. We do not know whether this might take the form of a single “explosive” event, such as the complete shut-down of the motor vehicle industry, or a series of related and damaging events, such as those that might result from the accumulated weight of climate-related taxes and fees. It is possible that the government storyline, which claims it will be technically feasible and economically affordable to eliminate all hydrocarbons use by 2050, will be exposed by events as a remarkably costly sham, but that will take time.

My own prediction is that Canadians’ views will ultimately be turned by so-called “pocketbook” issues. In other words, higher costs of energy services (i.e. heat, light, transportation, and process energy) will make Canadian industry clearly uncompetitive with companies in the United States, resulting in a large, noticeable outflow of investment and employment, with consequent reduction in government revenues and Canadians’ standard of living. The main victims would be firms in the emissions-intensive and trade-exposed industries (oil and gas, mining, petrochemicals, steel, cement, metal fabrication, plastics, etc.). A recent study by the Fraser Institute [10] projected that by 2030 the effects of carbon dioxide taxes alone would reduce GDP by 1.8% and cause the loss of over 180,000 jobs (mostly in Ontario and Quebec). Those taxes do not include the costs imposed by the Clean Fuel Standard (a regulation that has nothing to do with clean fuels but rather forces industry consuming oil products to pay financial penalties), higher electricity rates or the regulatory restrictions imposed on the oil and gas and other emissions-intensive industries. The Fraser Institute projections indicated that the $170 per tonne tax alone would reduce Canada’s GHG emissions by 26%, and that a $243 per tonne tax would be needed to reach the 2030 target.

No one has yet estimated how much carbon dioxide taxes would have to rise to eliminate 100% of emissions, but it clearly would far exceed $500 per tonne. The IPCC Report SR1.5 that analyzed the implications of the 1.5 degree C. target admitted that it could only be justified for a social cost of carbon ranging from US $135 per tonne to US $5,500 per tonne.[11]

Of Canada’s three largest trading partners – the United States, China and Mexico – only Mexico imposes a federal carbon dioxide tax, and that is equivalent to US. $3.50 per tonne. Some US states and Chinese provinces impose carbon dioxide taxes, but there are no federal ones, and the taxes are far below the $40 per tonne tax already imposed in Canada.

It is only a matter of time before Canada’s energy-intensive resource and manufacturing industries move their operations and investments elsewhere. Will it happen in a slow trickle or a thundering herd? When will climate policy hit the wall?

~~~~

[1] Robert Murphy and Ross McKitrick. Off Target. Fraser Institute, 2021

[2] British Petroleum Statistical Review of World Energy 2021

[3] Energy Fact Book 2021-2022, Natural Resources Canada

[4] Our World in Data, 2019

[5] https://blog.friendsofscience.org/wp-content/uploads/2021/12/Net-Zero-1.pdf

[6] Ross McKitrick and J. Christy, Pervasive Warming Bias in CHOP6 Tropospheric Layers, Earth and Space Science, July 15, 2020

[7] https://blog.friendsofscience.org/wp-content/uploads/2021/12/Net-Zero-1.pdf

[8] https://clintel.org/the-imaginary-climate-crisis-how-can-we-change-the-message-a-talk-by-richard-lindzen/

[9] Richard Lindzen, Global Warming: The Origin and Nature of the Alleged Scientific Consensus. CATO Review of Business and Government. Spring 1992

[10] Ross McKitrick and Elmira Aliakbari. Estimated Impacts of a $170 Carbon Tax in Canada. Fraser Institute, 2021

[11] Robert Murphy and Ross McKitrick, ibid

3 Comments

  1. Rex Maffey

    Excellent article. Thank you. Can you address the consequences of Co2 in the atmosphere today. Is it doing any damage or is it doing any good? Everything seems to be growing better and the planet seems to be greener. Your input please.

  2. Brian & Kim Allan

    The whole push to net-zero is simply a boondoggle of Liberal governments and will simply bankrupt Canada and most Canadians. When will we see some degree of common sense!? As China has said, they will not trade environmental controls for energy security. Canada should take the same approach…

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